US crude dips 19 cents, settling at $49.39, as oil exporters discuss output cuts

Oil prices pause, dips below $49

Oil prices fell on Monday as the market worried about higher output from OPEC and the United States, and as oil exporters met to discuss a deal to limit output.

U.S. crude futures ended Monday's session down 19 cents at $49.39 per barrel, after sinking to a low of $48.54 a barrel. Global benchmark Brent crude futures were down 25 cents at $52.17 a barrel by 2:19 p.m. ET (1819 GMT), after trading as low as $51.37 a barrel.

Both contracts stood well below levels hit last week, which marked their highest since late May.

Oil prices fell as much as 2 percent on Monday on selling triggered by a rebound in production from Libya's largest oil field along.

Output at Libya's Sharara field was returning to normal after a brief disruption by armed protesters in the coastal city of Zawiya, the National Oil Corporation (NOC) said. The field has boosted Libya's oil production, which climbed to more than 1 million bpd in late June.

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Doubts have emerged about the effectiveness of output cuts by the Organization of the Petroleum Exporting Countries and other big producers including Russia.

Officials from a joint OPEC and non-OPEC technical committee are meeting in Abu Dhabi on Monday and Tuesday to discuss ways to boost compliance with the deal to cut 1.8 million barrels per day in production.

OPEC's crude oil exports in July rose to a record high of 26.11 million bpd, most of which came from Nigeria, according to a report by Thomson Reuters Oil Research last week.

"The petroleum markets are tipping toward the lower end of their recent trading range as oil producers meeting in Abu Dhabi have been slow to assure the market that compliance with this years production cuts will be improved, although we continue to note that adherence to the limits has actually been quite strong by historical standards," Tim Evans, Citi Futures' energy futures specialist, said in a note.

High oil output in the United States was counteracting other bullish factors, including a Baker Hughes report on Friday that showed a cut of one drilling rig in the week to Aug. 4, bringing the total count down to 765.

U.S. weekly oil production hit 9.43 million bpd in the week to July 28, the highest since August 2015 and up 12 percent from its most recent low in June last year.

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Michael McCarthy, chief market strategist at CMC Markets, said, supportive news such as big drawdown in U.S. supplies would be needed to push U.S. WTI prices above $50 a barrel.

Still, some analysts said strong words from OPEC could help shore up prices.

"The negative price impact at the start of the week coming from OPEC and compliance focus will probably dissipate," said SEB Markets chief commodities analyst Bjarne Schieldrop.

"Saudi Arabia will restate that they will export only 6.6 million bpd (six-year low) in August and inventories will continue to draw down."

On the demand side, Goldman Sachs said data available so far for June points to continued strong growth.

"We believe that the biggest driver for this robust demand is strong economic growth in recent months," Goldman said in a note.